The bigger the boom, the bigger the bust

While we may have escaped with a mild winter, there’s little doubt
a snowball is growing in the UK hotel sector. Figures just out from
companies monitoring our sector, HVS and Solfo Cooper, suggest that
revenue per available room in our 12 biggest cities grew by an average
of 19 per cent in the last three months of last year.
 
At the time of
writing IHG is about to report a rise of 15 per cent in full year profits after
an exceptionally strong final quarter in America. Some owners are
sensing the time might be right to cash in. Diageo has put Gleneagles up
for sale with a cool £200m plus deal in prospect, and a potential
buyer, KSL Capital Partners, has done similar with Malmaison and Hotel
du Vin, less than twenty four months after buying them. Doing deals…big
deals…is soon going to be back in fashion.
 
I can’t help feeling a
sense of here we go again. Everyone sprinting for the money for the
next couple of years and then bang. Perhaps I’m being naive but wouldn’t
it be better for all concerned if the foot went a little more slowly to
the floor? Would that not mean a little less need for hard braking down
the line? I’m sure there are concierges everywhere who have lost count
of the number of times the sign above the front door has changed. Would a
more settled state not be in much the best interests of the vast
majority of people who work in the industry?
 
Check out this warning from PWC in November 2008:
 
UK
hotels forecast: the bigger the boom, the bigger the bust is our latest
UK hotels forecast. After five years of unbroken revenue growth,
September ushered in a period of volatile trading for the sector. The
deteriorating economic environment and travel outlook seems likely to
mark a change of fortune for UK hotels with buyers, not sellers, of
hotel rooms very much in the driving seat again as consumer spending
shifts. In a classic boom and bust sector, it’s happening again.
 
History suggests they got it right then. And history has a habit of repeating itself.

Any comments? Email Zoe Vernor

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Conference News hosts great guests on its pages. Our Blog section is the collection of the best opinions in the UK and international events industry.

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Conference News hosts great guests on its pages. Our Blog section is the collection of the best opinions in the UK and international events industry.

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